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Contract and Damages

Generally in the event a contract is breached, there are two remedies available to the suffering party.

The first and most common remedy is damages.

The other remedy which is more applicable in property law is Specific Performance such as when a party to a conveyance who refuses to complete the contract may be ordered by the court to complete the conveyance.

This article will focus mostly on different type of damages available in Australia

Damages

There are a number of damages available under the common law.

Compensatory Damages are damages awarded to non-breaching party of the contract with the view to compensate for the loss incurred as a result of the breach of contract. There are two types of compensatory damages:

Special Damages are damages awarded for special circumstances of the specific matter that could not have been compensated otherwise. The damages occurred as a result of the breach of contract may not be directly linked to the breach.

General Damages are the most common damages awarded in the breach of contract. General Damages refer to the direct damages arose from the breach of contract

Exemplary DamagesExemplary damages are usually awarded as a punishment of the guilty party. Exemplary Damages are not awarded lightly. The evidence may need to confirm that the breaching party acted fraudulently or maliciously.

If irrespective of the breach of contract there are no substantial damages to the no-breaching party, the court may order nominal damages which would compensate for the nominal losses of the non-breaching party.

Duty to mitigate

An important factor that may have a substantial impact on the damages awarded is the duty to mitigate.

The party who suffered damages as a consequence of the breach of the contract by the other party is required to mitigate the damages by minimizing the extent of damages reasonably. Accordingly any losses that could have been reasonably avoided or minimised my not be considered in the award of damages.

Contracts and compensation available as result of their breach are complicated matters of law.